1、Table of ContentsUNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington,D.C.20549FORM 20-F(Mark One)REGISTRATION STATEMENT PURSUANT TO SECTION 12(b)OR(g)OF THE SECURITIES EXCHANGE ACT OF 1934ORANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934ORFor the fiscal year

2、 ended December 31,2022.TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934ORSHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934Date of event requiring this shell company reportFor the transition period from to Commission fil

3、e number:001-38878So-Young International Inc.(Exact name of Registrant as specified in its charter)NA(Translation of Registrants name into English)Cayman Islands(Jurisdiction of incorporation or organization)Tower E,Ronsin Technology CenterChaoyang District,BeijingPeoples Republic of China(Address o

4、f principal executive offices)Xing Jin,Chief Executive Officer and Interim Chief Financial OfficerTower E,Ronsin Technology Center,Chaoyang District,BeijingPeoples Republic of ChinaPhone:+86(10)-8790-2012Email:(Name,Telephone,Email and/or Facsimile number and Address of Company Contact Person)Securi

5、ties registered or to be registered pursuant to Section 12(b)of the Act.Title of Each Class Trading Name of Each Exchange On Which RegisteredAmerican depositary shares,13 of which represent 10Class A ordinary shares,par value US$0.0005 per share*SY The Nasdaq Stock Market LLC(The Nasdaq GlobalMarket

6、)*Not for trading,but only in connection with the listing onthe Nasdaq Global Market of American depositary shares.Securities registered or to be registered pursuant to Section 12(g)of the ActNone(Title of Class)Securities for which there is a reporting obligation pursuant to Section 15(d)of the Act

7、None(Title of Class)Table of ContentsIndicate the number of outstanding shares of each of the issuers classes of capital or common stock as of the close of the period covered by the annualreport:As of December 31,2022,there were 80,843,320 ordinary shares outstanding,par value of US$0.0005 per share

8、,being the sum of 68,843,320 Class Aordinary shares(excluding treasury shares),par value of US$0.0005 per share and 12,000,000 Class B ordinary shares,par value of US$0.0005 per share.Indicate by check mark if the registrant is a well-known seasoned issuer,as defined in Rule 405 of the Securities Ac

9、t.Yes NoIf this report is an annual or transition report,indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d)of theSecurities Exchange Act of 1934.Yes NoNote Checking the box above will not relieve any registrant required to file reports pursuant t

10、o Section 13 or 15(d)of the Securities Exchange Act of1934 from their obligations under those Sections.Indicate by check mark whether the registrant(1)has filed all reports required to be filed by Section 13 or 15(d)of the Securities Exchange Act of 1934during the preceding 12 months(or for such sho

11、rter period that the registrant was required to file such reports),and(2)has been subject to such filingrequirements for the past 90 days.Yes NoIndicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 ofRegul

12、ation S-T(232.405 of this chapter)during the preceding 12 months(or for such shorter period that the registrant was required to submit such files).Yes NoIndicate by check mark whether the registrant is a large accelerated filer,an accelerated filer,a non-accelerated filer,or an emerging growth compa

13、ny.Seethe definitions of“large accelerated filer,”“accelerated filer,”and“emerging growth company”in Rule 12b-2 of the Exchange Act.Large accelerated filer Accelerated filer Non-accelerated filer Emerging growth company If an emerging growth company that prepares its financial statements in accordan

14、ce with U.S.GAAP,indicate by check mark if the registrant has elected notto use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a)of theExchange Act.The term“new or revised financial accounting standard”refers to any

15、 update issued by the Financial Accounting Standards Board to its AccountingStandards Codification after April 5,2012.Indicate by check mark whether the registrant has filed a report on and attestation to its managements assessment of the effectiveness of its internal controlover financial reporting

16、 under Section 404(b)of the Sarbanes-Oxley Act(15 U.S.C.7262(b)by the registered public accounting firm that prepared orissued its audit report.If securities are registered pursuant to Section 12(b)of the Act,indicate by check mark whether the financial statements of the registrant included in thefi

17、ling reflect the correction of an error to previously issued financial statements.Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive based compensation receivedby any of the registrants executive officers during the relevant

18、recovery period pursuant to 240.10D-1(b).Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:U.S.GAAP International Financial Reporting Standards as issued by the International Accounting Standards Board Other If“Other”

19、has been checked in response to the previous question,indicate by check mark which financial statement item the registrant has elected to follow.Item 17 Item 18If this is an annual report,indicate by check mark whether the registrant is a shell company(as defined in Rule 12b-2 of the Exchange Act).Y

20、es No(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12,13 or 15(d)of the Securities ExchangeAct of 1934 subsequent to the distribution of secu

21、rities under a plan confirmed by a court.Yes NoTable of ContentsiTABLE OF CONTENTSINTRODUCTION1FORWARD-LOOKING STATEMENTS4PART I5ITEM 1.IDENTITY OF DIRECTORS,SENIOR MANAGEMENT AND ADVISERS5ITEM 2.OFFER STATISTICS AND EXPECTED TIMETABLE5ITEM 3.KEY INFORMATION5ITEM 4.INFORMATION ON THE COMPANY63ITEM 4

22、A.UNRESOLVED STAFF COMMENTS101ITEM 5.OPERATING AND FINANCIAL REVIEW AND PROSPECTS101ITEM 6.DIRECTORS,SENIOR MANAGEMENT AND EMPLOYEES114ITEM 7.MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS126ITEM 8.FINANCIAL INFORMATION129ITEM 9.THE OFFER AND LISTING129ITEM 10.ADDITIONAL INFORMATION130ITEM 11.QUA

23、NTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK142ITEM 12.DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES142PART II145ITEM 13.DEFAULTS,DIVIDEND ARREARAGES AND DELINQUENCIES145ITEM 14.MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS145ITEM 15.CONTROLS AND PR

24、OCEDURES145ITEM 16A.AUDIT COMMITTEE FINANCIAL EXPERT146ITEM 16B.CODE OF ETHICS146ITEM 16C.PRINCIPAL ACCOUNTANT FEES AND SERVICES147ITEM 16D.EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES147ITEM 16E.PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS147ITEM 16F.CHANGE I

25、N REGISTRANTS CERTIFYING ACCOUNTANT148ITEM 16G.CORPORATE GOVERNANCE148ITEM 16H.MINE SAFETY DISCLOSURE148ITEM 16I.DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS149PART III150ITEM 17.FINANCIAL STATEMENTS150ITEM 18.FINANCIAL STATEMENTS150ITEM 19.EXHIBITS150SIGNATURES153Table of Con

26、tents1INTRODUCTIONUnless otherwise indicated and except where the context otherwise requires,references in this annual report on Form 20-F to:“ADRs”are to the American depositary receipts that evidence our ADSs;“ADSs”are to our American depositary shares,with every 13 ADSs representing 10 Class A or

27、dinary shares;“Class A ordinary shares”are to our Class A ordinary shares,par value US$0.0005 per share;“Class B ordinary shares”are to our Class B ordinary shares,par value US$0.0005 per share;“mobile MAUs”are to the sum of(i)the number of unique mobile devices that have accessed our platform throu

28、gh our So-Young mobile app at least once during a month,and(ii)the number of unique Weixin users that have accessed our platformthrough our Weixin mini programs at least once during a month.The numbers of our mobile MAUs are calculated usinginternal company data that has not been independently verif

29、ied,and we treat each distinguishable device and Weixin useraccount as a separate user for purposes of calculating mobile MAUs,although inaccuracy may result from the possibility thatsome individuals may use more than one mobile device,may share the same mobile device with other individuals,and/or m

30、ayuse both our mobile app and Weixin mini programs to access our platform;“monthly UVs”of ,are to the number of unique IP address that various internet browsers apply to access ourwebsite,from either PC end or mobile end,at least once during a month.The numbers of our monthly UVs of are calculated u

31、sing internal company data that has not been independently verified,and we treat each distinguishable IPaddress as a separate user for purposes of calculating monthly UVs,although inaccuracy may result from the possibility thatsome individuals may have more than one IP address and/or share the same

32、IP address with other individuals to access ourplatform;“the variable interest entities,”“the VIEs”and“the consolidated affiliated entities”are to Beijing So-Young Technology Co.,Ltd.,or Beijing So-Young,and Beijing Chiyan Medical Beauty Consulting,Ltd.,or Beijing Chiyan;“our WFOE”are to So-Young Wa

33、nwei Technology Consulting Co.,Ltd.,or Beijing Wanwei;“RMB”and“Renminbi”are to the legal currency of mainland China;“So-Young,”“we,”“us,”“our company”and“our”are to So-Young International Inc.,our Cayman Islands holding company,its subsidiaries,and in the context of describing our operations and con

34、solidated financial information,the VIEs and thesubsidiaries of the VIEs;“shares”or“ordinary shares”are to our Class A and Class B ordinary shares,par value US$0.0005 per share;“US$,”“U.S.dollars,”“$,”and“dollars”are to the legal currency of the United States;and“Wuhan Miracle”are to Wuhan Miracle L

35、aser Systems,Inc.Unless otherwise noted,all translations from Renminbi to U.S.dollars and from U.S.dollars to Renminbi in this annual report aremade at a rate of RMB6.8972 to US$1.00,the exchange rate in effect as of December 30,2022 as set forth in the H.10 statistical release ofThe Board of Govern

36、ors of the Federal Reserve System.We make no representation that any Renminbi or U.S.dollar amounts could havebeen,or could be,converted into U.S.dollars or Renminbi,as the case may be,at any particular rate,or at all.Table of Contents2Summary of Risk FactorsAn investment in our ADSs or Class A ordi

37、nary shares involves significant risks.Below is a summary of material risks we face,organized under relevant headings.These risks are discussed more fully in“Item 3.Key InformationD.Risk Factors.”Risks Related to Our Business and IndustryRisks and uncertainties related to our business and industry i

38、nclude,but are not limited to,the following:the online medical aesthetic service industry is rapidly evolving,which makes it difficult to evaluate our future prospects;our historical growth rates may not be indicative of our future growth.If we are unable to manage the growth and increasedcomplexity

39、 of our business,fail to control our costs and expenses,or fail to execute our strategies effectively,our business andprospects may be materially and adversely affected;we may be subject to consumer claims,regulatory or professional investigations and litigations regarding the medicalinformation and

40、 services offered on our platform,which could materially and adversely affect our brand,reputation,and resultsof operations;characterization of our business as engaging in medical,drug and/or medical device advertisement distribution in Chinawithout proper licenses or permits may have material impac

41、ts on our operations;we face risks associated with our acquisition of Wuhan Miracle and its business;if we fail to anticipate user preferences and provide high-quality and reliable content in a cost-effective manner,we may not beable to attract and retain users to remain competitive;if content provi

42、ders do not continue to contribute content that is high-quality,reliable or otherwise valuable to our users,wemay experience a decline in user traffic and user engagement;our business may be materially and adversely affected by an unfavorable market perception of the overall medical aestheticindustr

43、y;we depend significantly on the strength of our brand and reputation.Any failure to maintain and enhance,or any damage to,our brand image or reputation could materially and adversely affect our business,results of operations,financial condition andprospects;we are subject to uncertainties,changes a

44、nd developments in the regulatory framework in mainland China with respect to theprovision of online medical aesthetic services industry;we face risks related to health epidemics,natural disasters,and other outbreaks,which could significantly disrupt ouroperations;andour business is subject to compl

45、ex and evolving Chinese and international laws and regulations regarding cybersecurity,information security,privacy and data protection.Many of these laws and regulations are subject to change and uncertaininterpretation,and any failure or perceived failure to comply with these laws and regulations

46、could result in claims,changes toour business practices,negative publicity,legal proceedings,increased cost of operations,or declines in user growth orengagement,or otherwise harm our business.Table of Contents3Risks Related to Our Corporate StructureRisks and uncertainties related to our corporate

47、structure include,but are not limited to,the following:if the PRC government finds that the agreements that establish the structure for operating our operations in mainland China donot comply with regulations of mainland China relating to the relevant industries,or if these regulations or the interp

48、retation ofexisting regulations change in the future,we could be subject to severe penalties or be forced to relinquish our interests inthose operations.we rely on contractual arrangements with the consolidated affiliated entities and their respective shareholders for our businessoperations,which ma

49、y not be as effective as direct ownership in providing operational control;andany failure by the consolidated affiliated entities or their respective shareholders to perform their obligations under ourcontractual arrangements with them would have a material and adverse effect on our business.Risks R

50、elated to Doing Business in ChinaRisks and uncertainties related to doing business in China include,but are not limited to,the following:the PCAOB had historically been unable to inspect our auditor in relation to their audit work performed for our financial statementsand the inability of the PCAOB

51、to conduct inspections over our auditor in the past has deprived our investors with the benefits ofsuch inspections;Our ADSs may be prohibited from trading in the United States under the HFCAA in the future if the PCAOB is unable to inspector investigate completely auditors located in China.The deli

52、sting of the ADSs,or the threat of their being delisted,may materiallyand adversely affect the value of your investment.Risks Related to Our ADSsRisks and uncertainties related to our ADSs include,but are not limited to,the following:the trading price of our ADSs is likely to be volatile,which could

53、 result in substantial losses to investors;our dual-class voting structure limits your ability to influence corporate matters and could discourage others from pursuing anychange of control transactions that holders of our Class A ordinary shares and ADSs may view as beneficial;andwe cannot guarantee

54、 that any share repurchase program will be fully consummated or that any share repurchase program willenhance long-term shareholder value,and share repurchases could increase the volatility of the price of our ADSs and coulddiminish our cash reserves.Table of Contents4FORWARD-LOOKING STATEMENTSThis

55、annual report contains forward-looking statements that reflect our current expectations and views of future events.Theforward-looking statements are contained principally in the sections entitled“Item 3.Key InformationD.Risk Factors”“Item 4.Information on the CompanyB.Business Overview”and“Item 5.Op

56、erating and Financial Review and Prospects.”Known and unknownrisks,uncertainties and other factors,including those listed under“Item 3.Key InformationD.Risk Factors,”may cause our actual results,performance or achievements to be materially different from those expressed or implied by the forward-loo

57、king statements.You can identify some of these forward-looking statements by words or phrases such as“may,”“will,”“expect,”“anticipate,”“aim,”“estimate,”“intend,”“plan,”“believe,”“is/are likely to,”“potential,”“continue”or other similar expressions.We have based theseforward-looking statements large

58、ly on our current expectations and projections about future events that we believe may affect our financialcondition,results of operations,business strategy and financial needs.These forward-looking statements include statements relating to:our mission,goals;our ability to retain and increase the nu

59、mber of users and expand our service offerings;our future business development,financial conditions and results of operations;expected changes in our revenues,costs or expenditures;the trends in,expected growth and the market size of the online medical aesthetics industry,both in the PRC and globall

60、y;our expectations regarding demand for and market acceptance of our services;our expectations regarding our relationships with users and service providers;our use of proceeds;competition in our industry;general economic and business conditions in the market we have business;andrelevant government p

61、olicies and regulations relating to our industry.These forward-looking statements involve various risks and uncertainties.Although we believe that our expectations expressed inthese forward-looking statements are reasonable,our expectations may later be found to be incorrect.Our actual results could

62、 be materiallydifferent from our expectations.Important risks and factors that could cause our actual results to be materially different from ourexpectations are generally set forth in“Item 3.Key InformationD.Risk Factors”“Item 4.Information on the CompanyB.BusinessOverview”and“Item 5.Operating and

63、Financial Review and Prospects”and other sections in this annual report.You should read thoroughlythis annual report and the documents that we refer to with the understanding that our actual future results may be materially different fromand worse than what we expect.We qualify all of our forward-lo

64、oking statements by these cautionary statements.Table of Contents5PART IITEM 1.IDENTITY OF DIRECTORS,SENIOR MANAGEMENT AND ADVISERSNot applicable.ITEM 2.OFFER STATISTICS AND EXPECTED TIMETABLENot applicable.ITEM 3.KEY INFORMATIONOur Holding Company Structure and Contractual Arrangements with the Con

65、solidated Affiliated EntitiesSo-Young International Inc.is not a Chinese operating company,but rather a Cayman Islands holding company with no equityownership in its consolidated affiliated entities.Our Cayman Islands holding company does not conduct business operations directly.Weconduct our operat

66、ions in mainland China through(i)our subsidiaries in mainland China and(ii)the consolidated affiliated entities withwhich we have maintained contractual arrangements and their subsidiaries in mainland China.Laws and regulations of mainland Chinaimpose certain restrictions or prohibitions on foreign

67、ownership of companies that engage in certain value-added telecommunicationservices,internet audio-video program services and certain other businesses.Accordingly,we operate these businesses in mainland Chinathrough the consolidated affiliated entities and their subsidiaries,and rely on contractual

68、arrangements among our subsidiaries,theconsolidated affiliated entities and their nominee shareholders to control the business operations of the consolidated affiliated entities.Theconsolidated affiliated entities are consolidated for accounting purposes,but are not entities in which our Cayman Isla

69、nds holding company,or our investors,own equity.Revenues contributed by the consolidated affiliated entities accounted for 100.0%,93.0%and 79.9%of ourtotal revenues for the years ended December 31,2020,2021 and 2022,respectively.As used in this annual report,“we,”“us,”“ourcompany,”“our,”or“So-Young”

70、refers to So-Young International Inc.,its subsidiaries,and,in the context of describing our operations andconsolidated financial information,the consolidated affiliated entities in mainland China.Investors in our ADSs are not purchasing equityinterest in the consolidated affiliated entities in mainl

71、and China,but instead are purchasing equity interest in a holding company incorporatedin the Cayman Islands.A series of contractual agreements,including equity pledge agreement,exclusive option agreement,exclusive business cooperationagreement,power of attorney and spousal consent letter,have been e

72、ntered into by and among our subsidiaries,the consolidated affiliatedentities and their respective shareholders.Terms contained in each set of contractual arrangements with the consolidated affiliated entitiesand their respective shareholders are substantially similar.Despite the lack of legal major

73、ity ownership,our Cayman Island holding companyis considered the primary beneficiary of the consolidated affiliated entities and consolidates the consolidated affiliated entities and theirsubsidiaries as required by Accounting Standards Codification topic 810,Consolidation.Accordingly,we treat the c

74、onsolidated affiliatedentities as the consolidated entities under U.S.GAAP and we consolidate the financial results of the consolidated affiliated entities in theconsolidated financial statements in accordance with U.S.GAAP.For more details of these contractual arrangements,see“Item 4.Information on

75、 the CompanyC.Organizational StructureContractual Arrangements with the Consolidated Affiliated Entities and TheirRespective Shareholders.”However,the contractual arrangements may not be as effective as direct ownership in providing us with control over theconsolidated affiliated entities and we may

76、 incur substantial costs to enforce the terms of the arrangements.If the consolidated affiliatedentities or the nominee shareholders fail to perform their respective obligations under the contractual arrangements,we could be limited inour ability to enforce the contractual arrangements that give us

77、effective control over the consolidated affiliated entities,and theseagreements have not been tested in courts of mainland China.Furthermore,if we are unable to maintain effective control,we would not beable to continue to consolidate the financial results of these entities in our financial statemen

78、ts.See“Item 3.Key InformationD.RiskFactorsRisks Related to Our Corporate StructureWe rely on contractual arrangements with the consolidated affiliated entities and theirrespective shareholders for our business operations,which may not be as effective as direct ownership in providing operational cont

79、rol”and“Item 3.Key InformationD.Risk FactorsRisks Related to Our Corporate StructureThe shareholders of the consolidated affiliatedentities may have potential conflicts of interest with us,which may materially and adversely affect our business and financial condition.”Table of Contents6There are als

80、o substantial uncertainties regarding the interpretation and application of current and future laws,regulations and rulesof mainland China regarding the status of the rights of our Cayman Islands holding company with respect to its contractual arrangementswith the consolidated affiliated entities an

81、d their nominee shareholders.It is uncertain whether any new laws or regulations of mainlandChina relating to variable interest entity structures will be adopted or if adopted,what they would provide.If we or any of the consolidatedaffiliated entities is found to be in violation of any existing or f

82、uture laws or regulations of mainland China,or fail to obtain or maintain anyof the required permits or approvals,the relevant PRC regulatory authorities would have broad discretion to take action in dealing with suchviolations or failures.See“Item 3.Key InformationD.Risk FactorsRisks Related to Our

83、 Corporate StructureIf the PRC governmentfinds that the agreements that establish the structure for operating certain of our operations in mainland China do not comply withregulations of mainland China relating to the relevant industries,or if these regulations or the interpretation of existing regu

84、lations change inthe future,we could be subject to severe penalties or be forced to relinquish our interests in those operations”and“Uncertainties exist withrespect to the interpretation and implementation of the newly enacted PRC Foreign Investment Law and how it may impact the viability ofour curr

85、ent corporate structure,corporate governance and business operations.”Our corporate structure is subject to risks associated with our contractual arrangements with the consolidated affiliated entities.Ourcompany and its investors may never have a direct ownership interest in the businesses that are

86、conducted by the consolidated affiliatedentities.Uncertainties in the legal system of mainland China could limit our ability to enforce these contractual arrangements,and thesecontractual arrangements have not been tested in a court of law.If the PRC government finds that the agreements that establi

87、sh the structurefor operating our business in China do not comply with laws and regulations of mainland China,or if these regulations or the interpretationof existing regulations change or are interpreted differently in the future,we and the consolidated affiliated entities could be subject to sever

88、epenalties or be forced to relinquish our interests in those operations.This would result in the consolidated affiliated entities beingdeconsolidated.The majority of our assets,including the necessary licenses to conduct business in China,are held by the consolidatedaffiliated entities.Substantially

89、 all of our revenues are generated by the consolidated affiliated entities.An event that results in thedeconsolidation of the consolidated affiliated entities would have a material effect on our operations and result in the value of the securitiesof our company diminish substantially or even become

90、worthless.Our company,our subsidiaries and consolidated affiliated entities inmainland China,and investors of our company face uncertainty about potential future actions by the PRC government that could affect theenforceability of the contractual arrangements with the consolidated affiliated entitie

91、s and,consequently,significantly affect the financialperformance of the consolidated affiliated entities and our company as a whole.So-Young International Inc.may not be able to repay itsindebtedness,and the ADSs of our company may decline in value or become worthless,if we are unable to assert our

92、contractual controlrights over the assets of our subsidiaries in mainland China and consolidated affiliated entities that conduct all or substantially all of ouroperations.For a detailed description of the risks associated with our corporate structure,please refer to risks disclosed under“Item 3.Key

93、InformationD.Risk FactorsRisks Related to Our Corporate Structure.”Other Risks related to our Operations in Mainland ChinaWe face various risks and uncertainties related to doing business in China.Our business operations are primarily conducted inChina,and we are subject to complex and evolving laws

94、 and regulations of mainland China.For example,we face risks associated withregulatory approvals on offshore offerings,anti-monopoly regulatory actions,and oversight on cybersecurity and data privacy.We also facerisks associated with the lack of inspection by the Public Company Accounting Oversight

95、Board,or the PCAOB,on our auditors asdiscussed under“The Holding Foreign Companies Accountable Act.”These risks could result in a material adverse change in ouroperations and the value of our ADSs,significantly limit or completely hinder our ability to continue to offer securities to investors,or ca

96、usethe value of such securities to significantly decline.For a detailed description of risks related to doing business in China,“Item 3.D.KeyInformationRisk FactorsRisks Related to Doing Business in China.”PRC governments significant authority in regulating our operations and its oversight and contr

97、ol over offerings conducted overseasby,and foreign investment in,China-based issuers could significantly limit or completely hinder our ability to offer or continue to offersecurities to investors.Implementation of industry-wide regulations in this nature may cause the value of such securities to si

98、gnificantlydecline.For more details,see“Item 3.Key InformationD.Risk FactorsRisks Related to Doing Business in ChinaThe PRCgovernments significant oversight and discretion over our business operation could result in a material adverse change in our operations andthe value of our ADSs.”Table of Conte

99、nts7Risks and uncertainties arising from the legal system in China,including risks and uncertainties regarding the enforcement of lawsand quickly evolving rules and regulations in China,could result in a material adverse change in our operations and the value of our ADSs.For more details,see“Item 3.

100、Key InformationD.Risk FactorsRisks Related to Doing Business in ChinaUncertainties with respect tothe legal system of mainland China could adversely affect us.”The Holding Foreign Companies Accountable ActThe HFCAA states that if the SEC determines that we have filed audit reports issued by a regist

101、ered public accounting firm that hasnot been subject to inspection by the PCAOB for two consecutive years,the SEC shall prohibit our shares or ADSs from being traded on anational securities exchange or in the over-the-counter trading market in the United States.On December 16,2021,the PCAOB issued a

102、report to notify the SEC of its determination that the PCAOB was unable to inspect or investigate completely registered public accountingfirms headquartered in mainland China and Hong Kong,including our auditor.In May 2022,the SEC conclusively listed us as aCommission-Identified Issuer under the HFC

103、AA following the filing of our annual report on Form 20-F for the fiscal year ended December31,2021.On December 15,2022,the PCAOB issued a report that vacated its December 16,2021 determination and removed mainlandChina and Hong Kong from the list of jurisdictions where it is unable to inspect or in

104、vestigate completely registered public accounting firms.For this reason,we do not expect to be identified as a Commission-Identified Issuer under the HFCAA after we file this annual report onForm 20-F.Each year,the PCAOB will determine whether it can inspect and investigate completely audit firms in

105、 mainland China and HongKong,among other jurisdictions.If PCAOB determines in the future that it no longer has full access to inspect and investigate completelyaccounting firms in mainland China and Hong Kong and we continue to use an accounting firm headquartered in one of these jurisdictions toiss

106、ue an audit report on our financial statements filed with the Securities and Exchange Commission,we would be identified as aCommission-Identified Issuer following the filing of the annual report on Form 20-F for the relevant fiscal year.There can be no assurancethat we would not be identified as a C

107、ommission-Identified Issuer for any future fiscal year,and if we were so identified for two consecutiveyears,we would become subject to the prohibition on trading under the HFCAA.For more details,see“Item 3.Key InformationD.RiskFactorsRisks Related to Doing Business in ChinaThe PCAOB had historicall

108、y been unable to inspect our auditor in relation to theiraudit work performed for our financial statements and the inability of the PCAOB to conduct inspections over our auditor deprives ourinvestors with the benefits of such inspections”and“Item 3.Key InformationD.Risk FactorsRisks Related to Doing

109、 Business in ChinaOur ADSs may be prohibited from trading in the United States under the HFCAA in the future if the PCAOB is unable to inspect orinvestigate completely auditors located in China.The delisting of the ADSs,or the threat of their being delisted,may materially andadversely affect the val

110、ue of your investment.”Cash Flows through Our OrganizationWe have established stringent controls and procedures for cash flows within our organization.Each transfer of cash between ourCayman Islands holding company and a subsidiary,the consolidated affiliated entities or the subsidiaries of the cons

111、olidated affiliatedentities is subject to internal approval.The cash inflows of the Cayman Islands holding company were primarily generated from the proceedswe received from our public offerings of ordinary shares,historical financing activities and cash provided by our operating activities.In2020,2

112、021 and 2022,the Cayman Islands holding company transferred cash in the total amount of RMB31.9 million,RMB860.0 millionand nil to our subsidiaries in mainland China,the consolidated affiliated entities and their subsidiaries through our offshore intermediateholding entities.For the years ended Dece

113、mber 31,2020,2021 and 2022,no assets other than cash were transferred between the CaymanIslands holding company and a subsidiary,a consolidated affiliated entity or its subsidiary,no subsidiaries paid dividends or made otherdistributions to the holding company,and no dividends or distributions were

114、paid or made to U.S.investors.Pursuant to the ExclusiveBusiness Cooperation Agreements between our wholly-owned subsidiary in mainland China and the VIEs,the amount of service fee andpayment method shall be determined by the wholly-owned subsidiary in mainland China.The VIEs have paid RMB125.1 milli

115、on,RMB826.5 million and RMB264.0 million(US$38.3 million)of service fee to the wholly-owned subsidiary in mainland China under theVIE arrangements for the years ended December 31,2020,2021 and 2022,respectively.The VIEs expect to continue to settle any servicefees incurred under the Exclusive Busine

116、ss Cooperation Agreements.Table of Contents8As a Cayman Islands holding company,we may receive dividends from our subsidiaries in mainland China.Under the EnterpriseIncome Tax Law of the PRC,or the EIT Law,and related regulations,dividends,interests,rent or royalties payable by a foreign-investedent

117、erprise,such as our subsidiaries in mainland China,to any of its foreign non-resident enterprise investors,and proceeds from any suchforeign enterprise investors disposition of assets(after deducting the net value of such assets)are subject to a 10%withholding tax,unlessthe foreign enterprise invest

118、ors jurisdiction of incorporation has a tax treaty with China that provides for a reduced rate of withholding tax.Undistributed profits earned by foreign-invested enterprises prior to January 1,2008 are exempted from any withholding tax.The CaymanIslands,where So-Young International Inc.,the direct

119、parent company of our subsidiaries,is incorporated,does not have such a tax treatywith China.Hong Kong has a tax arrangement with China that provides for a 5%withholding tax on dividends subject to certain conditionsand requirements,such as the requirement that the Hong Kong resident enterprise own

120、at least 25%of the enterprise in mainland Chinadistributing the dividend at all times within the 12-month period immediately preceding the distribution of dividends and be a“beneficialowner”of the dividends.For example,So-Young Hong Kong Limited,which directly owns our subsidiary in mainland China,B

121、eijingWanwei,is incorporated in Hong Kong.However,if So-Young Hong Kong Limited is not considered to be the beneficial owner of thedividends paid to it by Beijing Wanwei under the tax circulars promulgated in February and October 2009,such dividends would be subjectto withholding tax at a rate of 10

122、%.If our subsidiaries in mainland China declare and distribute profits to us,such payments will be subjectto withholding tax,which will increase our tax liability and reduce the amount of cash available to our company.See“Item 3.KeyInformationD.Risk FactorsRisks Related to Our Corporate StructureWe

123、may rely on dividends and other distributions on equity paidby our subsidiaries in mainland China to fund any cash and financing requirements we may have,and any limitation on the ability of oursubsidiaries in mainland China to make payments to us and any tax we are required to pay could have a mate

124、rial and adverse effect on ourability to conduct our business”for more details.If our holding company in the Cayman Islands or any of our subsidiaries outside of Chinawere deemed to be a“resident enterprise”under the PRC Enterprise Income Tax Law,it would be subject to enterprise income tax on itswo

125、rldwide income at a rate of 25%.See“Item 3.Key InformationD.Risk FactorsRisks Related to Doing Business in ChinaIf we areclassified as a resident enterprise in mainland China for PRC income tax purposes,such classification could result in unfavorable taxconsequences to us and our shareholders that a

126、re non-resident in mainland China or ADS holders.”For purposes of illustration,the following discussion reflects the hypothetical taxes that might be required to be paid within China,assuming that:(i)we have taxable earnings,and(ii)we determine to pay dividends in the future.Tax calculation(1)Hypoth

127、etical pre-tax earnings(2)100%Tax on earnings at statutory rate of 25%(3)(25)%Net earnings available for distribution 75%Withholding tax at standard rate of 10%(4)(7.5)%Net distribution to Parent/Shareholders 67.5%Notes:(1)For purposes of this example,the tax calculation has been simplified.The hypo

128、thetical book pre-tax earnings amount,not consideringtiming differences,is assumed to equal taxable income in China.(2)Under the terms of VIE agreements,our subsidiaries in mainland China may charge the VIEs for services provided to VIEs.Theseservice fees shall be recognized as expenses of the VIEs,

129、with a corresponding amount as service income by our subsidiaries inmainland China and eliminate in consolidation.For income tax purposes,our subsidiaries and VIEs in mainland China file income taxreturns on a separate company basis.The service fees paid are recognized as a tax deduction by the VIEs

130、 and as income by oursubsidiaries in mainland China and are tax neutral.(3)Certain of our subsidiaries and VIEs qualifies for a 15%preferential income tax rate in China.However,such rate is subject toqualification,is temporary in nature,and may not be available in a future period when distributions

131、are paid.For purposes of thishypothetical example,the table above reflects a maximum tax scenario under which the full statutory rate would be effective.Table of Contents9(4)The PRC Enterprise Income Tax Law imposes a withholding income tax of 10%on dividends distributed by a foreign investedenterpr

132、ise,or FIE,to its immediate holding company outside of China.A lower withholding income tax rate of 5%is applied if theFIEs immediate holding company is registered in Hong Kong or other jurisdictions that have a tax treaty arrangement with China,subject to a qualification review at the time of the d

133、istribution.For purposes of this hypothetical example,the table above assumes amaximum tax scenario under which the full withholding tax would be applied.The table above has been prepared under the assumption that all profits of the VIEs will be distributed as fees to our subsidiaries inmainland Chi

134、na under tax neutral contractual arrangements.If,in the future,the accumulated earnings of the VIEs exceed the service feespaid to our subsidiaries in mainland China(or if the current and contemplated fee structure between the intercompany entities is determinedto be nonsubstantive and disallowed by

135、 Chinese tax authorities),the VIEs could make a non-deductible transfer to our subsidiaries inmainland China for the amounts of the stranded cash in the VIEs.This would result in such transfer being non-deductible expenses for theVIEs but still taxable income for the subsidiaries in mainland China.U

136、nder laws and regulations of mainland China,we are subject to restrictions on foreign exchange and cross-border cash transfers,including to U.S.investors.Our ability to distribute earnings to the holding company and U.S.investors is also limited.We are a CaymanIslands holding company and we may rely

137、 on dividends and other distributions on equity paid by our subsidiaries in mainland China,whichin turn relies on consulting and other fees paid to us by the consolidated affiliated entities,for our cash and financing requirements,includingthe funds necessary to pay dividends and other cash distribu

138、tions to our shareholders and service any debt we may incur.When any of oursubsidiaries in mainland China incurs debt on its own behalf,the instruments governing the debt may restrict its ability to pay dividends ormake other distributions to us.Our subsidiaries ability to distribute dividends is ba

139、sed upon their distributable earnings.Current regulations of mainland Chinapermit our subsidiaries in mainland China to pay dividends to their respective shareholders only out of their accumulated profits,if any,determined in accordance with accounting standards and regulations in mainland China.In

140、addition,each of our subsidiaries in mainlandChina and the consolidated affiliated entities is required to set aside at least 10%of its after-tax profits each year,if any,to fund a statutoryreserve until such reserve reaches 50%of its registered capital.Each of such entities in China is also require

141、d to further set aside a portion ofits after-tax profits to fund the employee welfare fund,although the amount to be set aside,if any,is determined at the discretion of its boardof directors.These reserves are not distributable as cash dividends.In addition,our subsidiaries in mainland China,the con

142、solidated affiliated entities and their subsidiaries generate their revenueprimarily in Renminbi,which is not freely convertible into other currencies.As a result,any restriction on currency exchange may limit theability of our subsidiaries in mainland China to pay dividends to us.For more details,s

143、ee“Item 3.Key InformationD.Risk FactorsRisks Related to Doing Business in ChinaWe may rely on dividends and other distributions on equity paid by our subsidiaries in mainlandChina to fund any cash and financing requirements we may have,and any limitation on the ability of our subsidiaries in mainlan

144、d China tomake payments to us and any tax we are required to pay could have a material and adverse effect on our ability to conduct our business.”and“Regulation of mainland China of loans to and direct investment in entities in mainland China by offshore holding companies andgovernmental control of

145、currency conversion may delay or prevent us from using the proceeds of our initial public offering to make loans orto make additional capital contributions to our subsidiaries in mainland China and variable interest entities,which could materially andadversely affect our liquidity and our ability to

146、 fund and expand our business.”Table of Contents10Permissions Required from the PRC Authorities for Our OperationsWe conduct our business primarily through our subsidiaries and consolidated affiliated entities in China.Our operations in Chinaare governed by laws and regulations of mainland China.As

147、of the date of this annual report,our subsidiaries in mainland China,consolidated affiliated entities and their subsidiaries have obtained the requisite licenses and permits from the PRC government authoritiesthat are material for the business operations of our holding company,the consolidated affil

148、iated entities in China,including,among others,the Value-Added Telecommunications Services Operating License for providing information services via the internet,or the ICP License.Wehave not obtained certain approvals,licenses and permits that may be required for some aspects of our business operati

149、ons.For example,weare required to but have not obtained the Audio-Visual License for providing internet audio-visual program services through our onlineplatform,including the provision of live video broadcasting,video recordings of live streaming videos and original short videos created byourselves

150、and our service providers.We do not consider such services to be material to our business and the revenues generated through theprovision of such services account for an insignificant portion of our total revenues.We are not eligible to apply for an Audio-Visual Licenseunder the current regulatory r

151、egime,because we are not a wholly state-owned or state-controlled entity as required for this license under lawsof mainland China.Given the uncertainties of interpretation and implementation of relevant laws and regulations and the enforcementpractice by relevant government authorities,we may be req

152、uired to obtain additional licenses,permits,filings or approvals for the functionsand services of our platform in the future.For more detailed information,see“Item 3.Key InformationD.Risk FactorsRisks Related toOur Business and IndustryOur failure to obtain and maintain approvals,licenses or permits

153、 applicable to our business could have amaterial adverse impact on our business,financial conditions and results of operations.”Furthermore,under current laws,regulations and regulatory rules of mainland China,we,our subsidiaries in mainland China and theconsolidated affiliated entities may be requi

154、red to fulfill filing and reporting procedures to the China Securities Regulatory Commission,orthe CSRC,in connection with offering and listing in an overseas market.For example,if we plan to conduct securities offering in anoverseas market different from the market where we are currently listed,we

155、may be required to fulfill filing and reporting requirement.Inaddition to the above filing and reporting requirements,we may also be required to report to the CSRC within three business days upon theoccurrence and public disclosure of any the following events:(i)change of control;(ii)investigation o

156、r sanctions by any overseas securitiesregulators or overseas authorities;(iii)change of listing status or listing segment;(iv)voluntary or mandatory delisting;and(v)materialchange of principal business operations after overseas issuance and listing.Additionally,we,our subsidiaries in mainland China

157、and theconsolidated affiliated entities may also be required to go through cybersecurity review by the Cyberspace Administration of China,or theCAC.As of the date of this annual report,we have not been subject to any cybersecurity review made by the CAC.If we fail to complete therelevant filing or r

158、eporting procedures for any future offshore offering or listing or if any of the specified events occur,we may facesanctions by the CSRC or other PRC regulatory authorities,which may include fines and penalties on our operations in China,limitations onour operating privileges in China,restrictions o

159、n or prohibition of the payments or remittance of dividends by our subsidiaries in China,restrictions on or delays to our future financing transactions offshore,or other actions that could have a material and adverse effect on ourbusiness,financial condition,results of operations,reputation and pros

160、pects,as well as the trading price of our ADSs.For more detailedinformation,see“Item 3.Key InformationD.Risk FactorsRisks Relating to Doing Business in ChinaThe approval of and/or filingwith the CSRC or other PRC government authorities may be required in connection with our offshore offerings under

161、laws of mainlandChina,and,if required,we cannot predict whether or for how long we will be able to obtain such approval or complete such filing.”and“Risks Related to Our Business and IndustryOur business is subject to complex and evolving Chinese and international laws andregulations regarding cyber

162、security,information security,privacy and data protection.Many of these laws and regulations are subject tochange and uncertain interpretation,and any failure or perceived failure to comply with these laws and regulations could result in claims,changes to our business practices,negative publicity,le

163、gal proceedings,increased cost of operations,or declines in user growth orengagement,or otherwise harm our business.”Financial Information Related to the Consolidated Affiliated EntitiesThe following table presents the condensed consolidating schedule of financial position for the consolidated affil

164、iated entities andother entities as of the dates presented.Table of Contents11Selected Condensed Consolidated Statements of Income Information For the year ended December 31,2022 Primary VIEs andOther Beneficiary VIEs EliminatingConsolidated Parent Subsidiaries of VIEs subsidiaries adjustments Total

165、sRMB(In thousands)Third-party revenues from services and sales 5,385 259,784 992,705 1,257,874Inter-company revenues from services and sales 3,742 251,739 12,203 (267,684)Total Revenue 9,127 511,523 1,004,908 (267,684)1,257,874Third-party costs from services and sales (130)(157,068)(236,094)(393,292

166、)Inter-company costs from services and sales (496)(12,641)(253,929)267,066 Total Costs (626)(169,709)(490,023)267,066 (393,292)Total operating expenses(9,659)(5,632)(418,412)(533,684)(967,387)(Loss)/income from subsidiaries and VIEs(55,104)(69,345)(22,408)146,857 Other non-operating(expenses)/income

167、(791)13,291 10,521 (7,288)15,733(Loss)/income before income tax expense(65,554)(53,185)(88,485)(26,087)146,239 (87,072)Income tax(expenses)/benefits (1,919)20,915 1,969 20,965Net(loss)/income(65,554)(55,104)(67,570)(24,118)146,239 (66,107)Net(income)/loss attributable to noncontrolling interests (1,

168、775)2,328 553Net(loss)/income attributable to So-Young InternationalInc.(65,554)(55,104)(69,345)(21,790)146,239 (65,554)For the year ended December 31,2021 PrimaryVIEs andOtherBeneficiary VIEsEliminatingConsolidated Parent Subsidiaries of VIEs subsidiaries adjustments Totals RMB (In thousands)Third-

169、party revenues from services and sales 7,244 112,058 1,573,161 1,692,463Inter-company revenues from service fees 21,744 584,914 358 (607,016)Total Revenue 28,988 696,972 1,573,519 (607,016)1,692,463Third-party costs from services and sales (2,156)(104,447)(221,286)(327,889)Inter-company costs from s

170、ervice fees (607,016)607,016 Total Costs (2,156)(104,447)(828,302)607,016 (327,889)Total operating expenses(9,556)(18,517)(546,861)(822,210)(1,397,144)(Loss)/income from subsidiaries and VIEs(1,412)(15,219)(79,541)96,172 Other non-operating income/(expenses)2,597 8,807 12,318 (7,557)16,165(Loss)/inc

171、ome before income tax expense(8,371)1,903 (21,559)(84,550)96,172 (16,405)Income tax(expenses)/benefits (3,315)5,608 (23,524)(21,231)Net(loss)/income(8,371)(1,412)(15,951)(108,074)96,172 (37,636)Net loss attributable to noncontrolling interests 732 28,533 29,265Net(loss)/income attributable to So-You

172、ng InternationalInc.(8,371)(1,412)(15,219)(79,541)96,172 (8,371)Table of Contents12 For the year ended December 31,2020 Primary VIEs and OtherBeneficiary VIEs Eliminating Consolidated Parent Subsidiaries of VIEs subsidiaries adjustments Totals RMB (In thousands)Third-party revenues from services and

173、 sales 100 1,294,888 1,294,988Inter-company revenues from service fees 26,055 339,623 (365,678)Total Revenue 26,155 339,623 1,294,888 (365,678)1,294,988Third-party costs from services and sales (2,771)(26,699)(182,736)(212,206)Inter-company costs from service fees (365,678)365,678 Total Costs (2,771

174、)(26,699)(548,414)365,678 (212,206)Total operating expenses(7,574)(31,429)(337,478)(762,995)(1,139,476)Income/(loss)from subsidiaries and VIEs 763 (24,312)(22,743)46,292 Other non-operating income 12,618 35,232 4,656 4,281 56,787Income/(loss)before income tax expense 5,807 2,875 (42,641)(12,240)46,2

175、92 93Income tax(expenses)/benefits (2,112)18,329 (11,433)4,784Net income/(loss)5,807 763 (24,312)(23,673)46,292 4,877Net loss attributable to noncontrolling interests 930 930Net income/(loss)attributable to So-Young InternationalInc.5,807 763 (24,312)(22,743)46,292 5,807Table of Contents13Selected C

176、ondensed Consolidated Balance Sheets Information As of December 31,2022 PrimaryVIEs andOtherBeneficiaryVIEsEliminatingConsolidated Parent Subsidiaries of VIEs subsidiaries adjustments Totals RMB (In thousands)Assets Cash and cash equivalents 143,100 127,411 253,646 170,263 694,420Restricted cash and

177、 term deposits 447 14,461 14,908Trade receivables 15,538 20,468 36,006Receivables from online payment platforms 3,409 11,378 14,787Amounts due from VIE companies 15,292 229,112 (244,404)Amounts due from Group companies 1,671,880 41,334 17,212 125,165 (1,855,591)Amount due from related parties 85 33,

178、297 33,382Term deposits and short-term investments 208,938 647,011 20,006 875,955Inventories,net 110,742 9,738 120,480Prepayment and other current assets 6,826 18,800 74,980 36,126 (9,843)126,889Investment in subsidiaries and VIEs 531,693 1,323,281 84,826 34,691 (1,974,491)Long-term investments 93,0

179、00 134,959 227,959Property and equipment,net 92,265 24,407 (488)116,184Intangible assets 137,609 31,671 169,280Deferred tax assets 1,613 37,043 26,083 64,739Operating lease right-of-use assets 27,709 35,189 62,898Goodwill 540,009 684 540,693Other non-current assets 86,516 12,777 99,293Total assets 2

180、,562,437 2,174,742 1,824,154 721,357 (4,084,817)3,197,873Liabilities Taxes payable 4,822 20,457 49,301 74,580Contract liabilities 33,917 76,242 110,159Salary and welfare payables 416 40,188 31,928 72,532Amounts due to VIE companies 39,786 5,315 80,064 (125,165)Amounts due to Group companies 23,722 1

181、,632,272 74,432 244,404 (1,974,830)Amounts due to related parties 5,895 5,895Accrued expenses and other current liabilities 1,004 224 46,306 186,898 (9,843)224,589Operating lease liabilities-current 19,314 30,971 50,285Operating lease liabilities-non current 9,465 11,507 20,972Deferred tax liabiliti

182、es 24,620 6,373 30,993Total liabilities 64,512 1,643,049 348,763 643,519 (2,109,838)590,005Shareholders equityNon-controlling interests 163,812 (6,988)(46,881)109,943So-Young International Inc.shareholders equity 2,497,925 531,693 1,311,579 84,826 (1,928,098)2,497,925Total liabilities and shareholde

183、rs equity 2,562,437 2,174,742 1,824,154 721,357 (4,084,817)3,197,873Table of Contents14 As of December 31,2021 PrimaryVIEs andOtherBeneficiaryVIEsEliminatingConsolidated Parent Subsidiaries of VIEs subsidiaries adjustments Totals RMB (In thousands)Assets Cash and cash equivalents 55,806 700,146 320,

184、361 255,655 1,331,968Restricted cash and term deposits 15,119 15,119Trade receivables 21,012 33,817 54,829Receivables from online payment platforms 5,388 13,476 18,864Amounts due from VIE companies 39,681 300,270 (339,951)Amounts due from Group companies 1,457,100 39,013 14,490 116,817 (1,627,420)Am

185、ount due from related parties 14,038 14,038Term deposits and short-term investments 318,881 90,065 408,946Inventories,net 91,761 51 91,812Prepayment and other current assets 6,027 12,719 23,390 75,772 (26,066)91,842Investment in subsidiaries and VIEs 617,773 1,348,235 82,965 35,082 (2,084,055)Long-t

186、erm investments 7,418 93,000 152,082 252,500Property and equipment,net 12 101,504 23,060 124,576Intangible assets 158,078 35,877 193,955Deferred tax assets 1,391 13,575 32,554 47,520Operating lease right-of-use assets 63 38,034 57,512 95,609Goodwill 540,009 684 540,693Other non-current assets 26,688

187、 11,923 9,486 48,097Total assets 2,502,686 2,128,267 1,905,825 871,082 (4,077,492)3,330,368Liabilities Taxes payable 1,906 10,844 35,821 48,571Contract liabilities 39,728 99,427 139,155Salary and welfare payables 485 55,437 47,702 103,624Amounts due to VIE companies 35,529 46,289 34,999 (116,817)Amo

188、unts due to Group companies 20,068 1,458,679 31,856 339,951 (1,850,554)Amounts due to related parties 681 681Accrued expenses and other current liabilities 900 3,072 204,144 194,791 (26,066)376,841Operating lease liabilities-current 63 15,197 28,269 43,529Operating lease liabilities-non current 22,9

189、66 39,390 62,356Deferred tax liabilities 31,146 7,431 38,577Total liabilities 56,497 1,510,494 446,317 793,463 (1,993,437)813,334Shareholders equityNon-controlling interests 122,975 (5,346)(46,784)70,845So-Young International Inc.shareholders equity 2,446,189 617,773 1,336,533 82,965 (2,037,271)2,44

190、6,189Total liabilities,mezzanine equity and shareholdersequity/(deficit)2,502,686 2,128,267 1,905,825 871,082 (4,077,492)3,330,368Table of Contents15Selected Condensed Consolidated Cash Flows Information For the year ended December 31,2022 PrimaryVIEs andOtherBeneficiaryVIEsEliminatingConsolidated P

191、arent Subsidiaries of VIEs subsidiaries adjustments Totals RMB (In thousands)Condensed Consolidating Schedules of Cash Flows Inter-company(payments)/receipts related to service andsales (25,089)327,117 (302,028)Other operating/administrative activities with external parties(54,390)115,125 (451,962)2

192、78,354 (112,873)Net cash(used in)/provided by operating activities(54,390)90,036 (124,845)(23,674)(112,873)Purchase of short-term investments and term deposits(201,348)(623,489)(340,433)(40,500)(1,205,770)Proceeds from maturities of short-term investments 318,785 410,000 36,000 764,785Acquisitions o

193、f subsidiaries,net of cash acquired (97,492)(97,492)Loans to Group companies(82,766)(56,821)(16,646)(37,000)193,233 Repayments from Group companies 41,383 252 66,000 (107,635)Other investing activities with external parties (291)(33,444)(33,735)Net cash provided by/(used in)investing activities 76,0

194、54 (680,058)21,138 (74,944)85,598 (572,212)Borrowings under loan from Group companies 92,685 37,000 63,548 (193,233)Repayments to borrowings under loan from Groupcompanies (51,383)(56,252)107,635 Other financing activities with external parties(14,247)661 (13,586)Net cash(used in)/provided by financ

195、ing activities(14,247)41,302 37,000 7,957 (85,598)(13,586)Effect of exchange rate changes on cash and cashequivalents 79,877 (24,015)55,862Net increase/(decrease)in cash and cash equivalents 87,294 (572,735)(66,707)(90,661)(642,809)Cash and cash equivalents at the beginning of the year 55,806 700,14

196、6 320,361 267,496 1,343,809Cash and cash equivalents at the end of the year 143,100 127,411 253,654 176,835 701,000Table of Contents16 For the year ended December 31,2021 PrimaryVIEs andOtherBeneficiaryVIEsEliminatingConsolidated Parent Subsidiaries of VIEs subsidiaries adjustments Totals RMB (In th

197、ousands)Condensed Consolidating Schedules of Cash Flows Inter-company receipts/(payments)related to service fee 19,529 826,534 (846,063)Other operating/administrative activities with external parties 12,117 (42,718)(423,823)538,711 84,287Net cash provided by/(used in)operating activities 12,117 (23,

198、189)402,711 (307,352)84,287Purchase of short-term investments(610,841)(1,048,963)(220,000)(40,000)(1,919,804)Proceeds from maturities of short-term investments 549,344 2,213,525 180,000 110,000 3,052,869Acquisitions of business combination,net of cash acquired (635,970)(902)(636,872)Capital contribu

199、tion to Group companies (860,000)860,000 Loans to Group companies(446,270)(289,903)(164,000)900,173 Repayments from Group companies 764,712 68,675 82,006 (915,393)Other investing activities with external parties (130,127)(26,244)(156,371)Net cash provided by/(used in)investing activities 256,945 304

200、,562 (1,027,325)(39,140)844,780 339,822Capital contribution from Group companies 860,000 (860,000)Borrowings under loan from Group companies 575,270 35,000 289,903 (900,173)Repayments to borrowings under loan from Group companies (846,716)(68,677)915,393 Other financing activities with external part

201、ies(216,743)(216,743)Net cash(used in)/provided by financing activities(216,743)(271,446)895,000 221,226 (844,780)(216,743)Effect of exchange rate changes on cash and cash equivalents(2,813)(4,782)(1,647)(9,242)Net increase/(decrease)in cash and cash equivalents 49,506 5,145 268,739 (125,266)198,124

202、Cash and cash equivalents at the beginning of the year 6,300 695,001 51,622 392,762 1,145,685Cash and cash equivalents at the end of the year 55,806 700,146 320,361 267,496 1,343,809 For the year ended December 31,2020 PrimaryVIEs andOtherBeneficiaryVIEsEliminatingConsolidated Parent Subsidiaries of

203、 VIEs subsidiaries adjustments Totals RMB (In thousands)Condensed Consolidating Schedules of Cash Flows Inter-company receipts/(payments)related to service fee 23,433 125,141 (148,574)Other operating/administrative activities with external parties 43,212 4,273 (296,612)428,307 179,180Net cash provid

204、ed by/(used in)operating activities 43,212 27,706 (171,471)279,733 179,180Purchase of short-term investments(402,913)(1,955,851)(90,000)(354,235)(2,802,999)Proceeds from maturities of short-term investments 808,562 1,715,316 205,000 403,000 3,131,878Loans to Group companies(823,116)(32,625)855,741 R

205、epayments from Group companies 365,401 99 (365,500)Other investing activities with external parties(8,266)(196,768)(205,034)Net cash(used in)/provided by investing activities(60,332)(273,061)115,000 (148,003)490,241 123,845Borrowings under loan from Group companies 823,116 32,625 (855,741)Repayments

206、 to borrowings under loan from Group companies (365,401)(99)365,500 Other financing activities with external parties 696 (6,500)(5,804)Net cash provided by/(used in)financing activities 696 457,715 32,526 (6,500)(490,241)(5,804)Effect of exchange rate changes on cash and cash equivalents(51,506)(868

207、)(347)(52,721)Net(decrease)/increase in cash and cash equivalents(67,930)211,492 (24,292)125,230 244,500Cash and cash equivalents at the beginning of the year 74,230 483,509 75,914 267,532 901,185Cash and cash equivalents at the end of the year 6,300 695,001 51,622 392,762 1,145,685Table of Contents

208、17B.Capitalization and IndebtednessNot applicable.C.Reasons for the Offer and Use of ProceedsNot applicable.D.Risk FactorsRisks Related to Our Business and IndustryThe online medical aesthetic service industry is rapidly evolving,which makes it difficult to evaluate our future prospects.The online m

209、edical aesthetic service industry is still at an early stage of development and is rapidly evolving.There are few well-established and widely-accepted online medical aesthetic service platforms.Although we launched our online medical aesthetic servicebusiness in November 2013 and we are now the lead

210、er in the online medical aesthetic service industry in China,we have not yetdemonstrated our ability to generate significant revenue.We believe that our business model is novel and we have a limited operating historyon which investors can evaluate our business and prospects.As our business develops

211、and as we respond to competition,we may continue tointroduce new service offerings and make adjustments to our existing services and to our business operation in general.Any significantchange to our business model that does not achieve expected results may have a material and adverse impact on our f

212、inancial condition andresults of operations.It is therefore difficult to effectively assess our future prospects.The online medical aesthetic platform service industry may not develop as expected.Prospective users and medical serviceproviders may not be familiar with the development of online medica

213、l aesthetic service markets and may have difficulties distinguishing ourservices from those of our competitors.Convincing prospective users and medical service providers of the value of using our services isimportant to the success of our business.You should consider our business and prospects in li

214、ght of the risks and challenges we encounter or may encounter given the rapidlyevolving market in which we operate and our limited operating history.These risks and challenges include our ability to,among other things:manage our future growth;offer personalized and competitive online medical aesthet

215、ic services;increase the utilization of our service by existing and new users;maintain and enhance our relationships with medical service providers and our other partners;navigate the evolving regulatory environment;enhance our technology infrastructure to support the growth of our business;improve

216、our operational efficiency;attract,retain and motivate talented employees;cope with economic fluctuations;anddefend ourselves against legal and regulatory actions.Table of Contents18Our historical performance may not be indicative of our future growth.If we are unable to resume growth and manage inc

217、reasedcomplexity of our business,fail to control our costs and expenses,or fail to execute our strategies effectively,our business and prospectsmay be materially and adversely affected.Our historical performance may not be indicative of our future growth.While our total revenues increased by 30.7%fr

218、omRMB1,295.0 million in 2020 to RMB1,692.5 million in 2021,our revenues decreased by 25.7%to RMB1,257.9 million(US$182.4 million)in 2022.In addition,although our gross profit increased significantly by 26.0%from RMB1,082.8 million in 2020 to RMB1,364.6 million in2021,our gross profit decreased by 36

219、.6%to RMB864.6 million(US$125.4 million)in 2022.Our gross margin decreased from 83.6%in2020 to 80.6%in 2021,and further decreased to 68.7%in 2022.As such,our historical growth or decline may not be indicative of our futureperformance,and we may not be able to regain our historical growth rates in fu

220、ture periods.Our revenue growth may slow,or our totalrevenues may continue to decline in the future for a number of possible reasons,including decreasing consumer spending,changes inregulations and government policies,increasing competition,slowing down of Chinas medical aesthetic industry,emergence

221、 of alternativebusiness models,and general economic conditions.If we are unable to resume growth,investors perceptions of our business and businessprospects may be adversely affected and the market price of our ADSs could decline.We may be subject to consumer claims,regulatory or professional invest

222、igations and litigations regarding the medical information andservices offered on our platform,which could materially and adversely affect our brand,reputation,and results of operations.We work with medical aesthetic service providers when a medical or beauty treatment is performed for our user thro

223、ugh reservationfrom our platform.In 2022,we expanded our presence in the medical aesthetics industry from online to offline by collaborating withestablished medical aesthetics providers.Together with our partnering medical aesthetics providers,we offer a range of standardized non-surgical aesthetic

224、treatments,under our own brand.Our partnering medical aesthetic service providers are primarily responsible forproviding equipment,raw materials,and consumables,and conducting treatments in their own premises.We have implemented a screeningprocedure through verifying the qualifications and required

225、licenses of medical service providers and also have recorded the contact persondetails of such medical service providers.However,we cannot assure you that all the information of the medical service providers we have isupdated in a timely manner.Pursuant to the PRC Consumer Protection Law,under the c

226、ircumstances where the users suffer injuries ordamages due to the service reserved on our platform,especially treatment we offered in collaboration with our partnering medical aestheticservice providers under our own brand,they may bring claims or legal proceedings against us as a platform service p

227、rovider if we fail toprovide the real names,addresses and valid contact details of the medical service providers in the event that users request such informationfor purposes of seeking compensation from the medical service providers.Furthermore,if we know or should have known that medicalservice pro

228、viders we collaborate with infringe upon the legitimate rights and interests of users but we fail to take necessary measures,wemay be subject to joint and several liability with the medical service providers.Users may also seek refunds in such situations.Table of Contents19Any incorrect decisions on

229、 the part of our service providers or any incorrect decisions made by our own medical treatment facilitiesmay result in undesirable or unexpected outcomes,including complications,injuries and potentially death in the most extreme cases.Wemay be subject to complaints,claims or legal proceedings initi

230、ated by our users as a result of any negative physical reaction to servicesreserved on our platform or services provided by ourselves.In addition,unsatisfactory services provided by the doctors may result in usersbring complaints and claims to us.We have implemented a strict procedure to verify the

231、qualifications and required licenses of the medicalservice providers we partner with.However,we cannot assure you that all our medical service providers are fully licensed and qualified asrequired by laws of mainland China.Pursuant to the PRC E-Commerce Law that became effective on January 1,2019,we

232、 are required toverify the identities of the persons doing online businesses over our platform(such as medical service providers on our platform),includingbut not limited to verification of business licenses and other required qualifications or licenses,and shall take necessary steps if we find outo

233、r should have found out that services provided by a service provider do not comply with the requirements of health and safety protections.If we are deemed to have failed to verify the service providers qualifications and licenses,or failed to otherwise perform our obligations as aplatform with respe

234、ct to services that are pertinent to the life and health of consumers provided through our platform,we may be subject topotential sanctions under laws of mainland China,including suspension of certain business activities,rectification,compensation,andadministrative penalties,and may face civil and c

235、riminal liabilities.See“Item 4.Information on the CompanyB.Business OverviewRegulationsRegulations on Consumer Protection”and“RegulationRegulations on E-commerce.”Moreover,failure to performmedical services in accordance with various evolving laws and regulations of mainland China could expose us to

236、 penalties,claims,regulatory actions or litigations.As of the date of this annual report,certain of the consolidated affiliated entities are engaging in aestheticmedical services.We may not be able to avoid malpractice,medical negligence or misconduct exposure,including malpractice,medicalnegligence

237、 or misconduct by our personnel,machine or equipment error.We cannot assure you that we will not be involved in malpractice,medical negligence or misconduct claims in the future.These claims may be brought against us by way of legal proceedings or lodging offormal complaints with the relevant licens

238、ing regulatory bodies.Any non-compliance with the relevant regulations may expose us toregulatory actions and administrative penalties,and negatively affect our business operation and financial position.See“Item 4.Informationon the CompanyB.Business OverviewRegulationRegulations on Medical Liabiliti

239、es”And“RegulationRegulations on AestheticMedical Services.”In addition,as medical aesthetic service focuses on improving our users physical appearance,users may have varying expectationsof the magnitude of improvement that may result from the medical aesthetic services.Users who are dissatisfied wit

240、h the services receivedmay request refunds and other compensation from us,complain on our platform and other social media platforms and/or file legal claimsagainst us.We have experienced complaints from our users in the past,and we cannot assure you that we will be able to successfully manageusers e

241、xpectation and prevent their complaints,allegations and other claims in the future.Such complaints,allegations and other claims,regardless of merits,may have a material adverse effect on our reputation,business,results of operations,financial condition and prospects.Although we sometimes offer compl

242、imentary services,refunds and/or other insignificant amount of monetary compensations to addressusers complaints,the amounts of which have been immaterial historically,we cannot assure you that we can successfully address all usercomplaints in the future.Moreover,we require all platform users to hav

243、e full legal capacity,and minors to be accompanied by their legalguardians,when they use medical services reserved or accessed through our platform.However,we cannot assure you that we can prevent allmedical service providers from performing medical procedures on minors without parental consent,or p

244、revent all minors from obtainingmedical treatment from service providers without providing parental consent.Such non-compliance by users who are minors or by medicalservice providers could materially and adversely affect our brand image and reputation.We may be subject to regulatory or professional

245、investigations and litigations.Any complaint,claim or legal proceeding,regardlessof merit,could adversely affect our brand image and reputation.In addition,any legal proceeding that may be brought against us could divertmanagement resources and incur extra costs.A settlement or successful claim agai

246、nst us can result in legal costs,damages,compensationand reputational damage to use and may adversely affect our business,results of operations,financial condition and prospects.Table of Contents20Characterization of our business as engaging in medical,drug and/or medical device advertisement distri

247、bution in China without properlicenses or permits may have material impacts on our operations.We dedicate ourselves to providing transparent information.The information available on our platform includes but is not limited toregistration or practicing license details and contact information,of medic

248、al service provides,description of different types of medicalaesthetic services,the price of such services and reviews and Beauty Diaries associated with the service providers contributed by users.Wealso connect our users with medical service providers.We have adopted internal control and platform r

249、egulation measures seeking to ensurethe authenticity and pertinence of the medical aesthetic information available on our platform and endeavor to prevent the informationdisseminated on our platform from being considered medical,drug or other medical device advertisements.We believe it is improbable

250、 that PRC governmental authorities will deem the content or the format of the information disseminatedfrom and displayed on our platform to constitute medical,drug or other medical device advertisements,and we have not been subject to anyregulatory authoritys inquiries or investigations in connectio

251、n with the content or format of information disseminated from and displayed onour platform.However,as advertisement is currently defined vaguely and broadly under the relevant laws and regulations of mainland Chinaand the available regulatory interpretations,we cannot assure you that the information

252、 provided by medical aesthetic services providers onour platform will not be deemed by relevant authorities as advertisement.If certain information listed on our platform is considered medical advertisement,it will subject us to regulations that may havematerial impacts on our operations.Medical,dru

253、g and/or medical devices advertisement must be approved by relevant PRC authoritiesbefore they are distributed,and distributors,among other obligations,are required to review the applicable licenses and permits of themedical service providers,ensure the content displayed is fair and accurate,and tak

254、e steps to monitor the content of advertisements displayedon their platforms.In addition,distributors are required to label advertisements from other information so that consumers will not be misled.Furthermore,we may be required to scale back,rearrange or alter the content or format of information

255、displayed on our platform,therebyaffecting the fundamental of our business model.As a result,compliance with laws and regulations applicable to the advertisement industrycould materially and adversely affect our business prospects,results of operations and financial condition.In addition,we will als

256、o be subjectto increased liability under these laws and regulations and may incur additional costs,such as fines or other penalties,if we fail to comply.Such liabilities and costs could have a material adverse effect on our business,financial condition,results of operations and prospects.See“Item 4.

257、Information on the CompanyB.Business OverviewRegulationsRegulations on Advertising.”Moreover,we may be subjectto additional taxes applicable to the advertisement industry.Our expansion plans,including our plans to expand into new business lines,business categories and geographic areas,are subject to

258、uncertainties and risks,and we may not be able to successfully manage our expanded operations.To serve our expanding user base and our users evolving medical service needs,we continuously expand into new geographic areasand offer new services.For example,in 2022,we expanded our presence in the medic

259、al aesthetics industry from online to offline bycollaborating with established medical aesthetics providers.Expansion into diverse locations,new business lines and business categoriesinvolves new risks and challenges.Our lack of familiarity with these new geographic areas and service offerings may m

260、ake it more difficultfor us to anticipate user demand and preferences.We have mainly focused on service providers in the major urban centers in China,and we plan to expand our nationwide networkcoverage to penetrate further into Chinas smaller cities.We also plan to expand further into international

261、 markets.There is no assurance thatour geographic expansion strategies will be successful.As we enter markets and countries that are new to us,we must tailor our services andbusiness model to the unique circumstances of such markets and countries,which can be complex,difficult and costly,and divertm

262、anagement and personnel resources.In addition,we may face competition from platforms that may have more experience with operationsin such markets and countries.In addition,laws and business practices that favor local competitors or prohibit or limit foreign ownership ofcertain businesses,or our fail

263、ure to adapt our practices,systems,processes and business models effectively to user preferences of eachcountry into which we expand,could slow our growth.Certain markets in which we operate have,or certain new markets in which we mayoperate in the future may have,lower margins than our more mature

264、markets,which could have a negative impact on our overall margins asour revenues from these markets grow over time.Table of Contents21We also plan to continue to introduce and expand new services on our platform.Expansion into diverse new products and servicecategories involves new risks and challen

265、ges.Our lack of familiarity with these new service offerings and lack of relevant customer data maymake it more difficult for us to anticipate customer demand and preferences and manage legal,operational,competitive and other risks.Wecannot assure you that we will be able to recoup our investments i

266、n introducing these new service categories.For example,many dentalservice providers on our platform had reduced business operations due to the quarantine measures related to the COVID-19 outbreak,whichcould result in decreased marketing spending on and less cooperation with our platform.We are cogni

267、zant that there are many unknownsrelating to the duration,severity and overall macroeconomic impact of the outbreak.If we fail to execute our expansion strategies effectivelyor address the challenges and risks we encounter when executing our expansion strategies,our business and results of operation

268、s could bematerially and adversely affected.We face risks associated with our acquisition of Wuhan Miracle and its business.There can be no assurance that the acquired Wuhan Miracle will bring the anticipated benefits to us.We have limited experiencewith the research and development,production,sales

269、 and agency of medical beauty equipment and we may not be able to successfullyintegrate Wuhan Miracle into our existing business.We face uncertainties and challenges in navigating the complex regulatory environment,competing effectively in product performance,reliability,quality and safety,and devel

270、oping and/or upgrading products and services as wellas technologies to meet everchanging user needs.If implemented ineffectively or if impacted by unforeseen negative economic or marketconditions or other factors,we may not realize the full anticipated benefits of the acquisition of Wuhan Miracle.Ou

271、r failure to meet thechallenges involved in realizing the anticipated benefits of the acquisition of Wuhan Miracle could cause an interruption of,or a loss ofmomentum in,our business and could adversely affect our results of operations.The acquisition and integration of the businesses may resultin m

272、aterial unanticipated problems,expenses,liabilities,competitive responses and diversion of managements attention,and we may recordimpairment charges or write-offs in connection therewith if the anticipated benefits of the acquisition fail to realize.We would be subject toand may not be able to succe

273、ssfully manage a variety of additional risks associated with respect to combining Wuhan Miracle with us.Theserisks include,but are not limited to,the following:challenges in the integration of operations and systems and in managing the expanded operations of a larger and more complexcompany;challeng

274、es in achieving anticipated business opportunities and growth prospects from combining the businesses of WuhanMiracle with the rest of our businesses;rules and measures governing the production,sales and agency of medical beauty equipment are complex and evolving,andwe may not be able to navigate su

275、ch complex regulatory environment or to respond to future changes in regulatoryenvironment in an effective and timely manner;if our products do not achieve and maintain market acceptance,our business and results of operations could be materiallyadversely impacted.Because the markets Wuhan Miracle op

276、erated in are highly competitive,customers may choose topurchase our competitors products or services,which would result in reduced revenue and loss of market share.reduction or interruption in supply or other manufacturing difficulties may adversely affect our manufacturing operations andrelated pr

277、oduct sales;if our products contain defects or encounter performance problems,we may have to recall our products,incur additionalunforeseen costs,and our reputation may suffer;we are subject to product liability and negligence claims relating to the use of our products and other legal proceedings th

278、atcould materially adversely affect our financial condition,divert managements attention,and harm our business;if we lose key personnel of Wuhan Miracle or are unable to attract and retain additional personnel,our ability to compete willbe harmed and increases in labor costs could materially adverse

279、ly impact our business and results of operations;andTable of Contents22unanticipated additional costs and expenses resulting from the integration of additional personnel,operations,products,services,technology and increased internal controls and financial reporting responsibilities could materially

280、adversely impactour business and results of operationsIf we fail to anticipate user preferences and provide high-quality and reliable content in a cost-effective manner,we may not be able toattract and retain users to remain competitive.Our success depends on our ability to maintain and grow user en

281、gagement on our platform.To attract and retain users and competeagainst our competitors,we must continue to offer high-quality and reliable content to provide our users with a superior online medicalaesthetic service experience.To this end,we must continue to produce original content and source new

282、professional and user-generatedcontent in a cost-effective manner.Given that we operate in a rapidly evolving industry,we need to anticipate user preferences and industrychanges and respond to such changes timely and effectively.If we fail to continue to offer high-quality and reliable content to ou

283、r users thatcater to the needs and preferences,we may suffer from reduced user traffic and engagement,and our business,financial condition and resultsof operations may be materially and adversely affected.In addition to content generated by our users,we rely on our in-house team to generate creative

284、 ideas for original content and tosupervise the original content origination and production process,and we intend to continue to invest resources in content production.Weface competition for qualified personnel in a limited pool of high-quality creative talent.If we are not able to compete effective

285、ly for talentsor attract and retain top talents at reasonable costs,our original content production capabilities would be negatively impacted.Anydeterioration in our in-house content production capability,inability to attract creative talents at reasonable costs or losses in personnel maymaterially

286、and adversely affect our business and operating results.If content providers do not continue to contribute content that is high-quality,reliable or otherwise valuable to our users,we mayexperience a decline in user traffic and user engagement.In addition to content produced by ourselves,our ability

287、to provide users with interesting,reliable and industry-specific contentdepends on information and content contributed by our users.We believe that one of our competitive advantages is the quality,quantity andopen nature of the content on our platform,and that access to reliable,rich and industry-sp

288、ecific content is one of the main reasons users visitSo-Young.We seek to foster a broader and more engaged user community,and we encourage influencers,such as social media celebritiesand key opinion leaders,and doctors to use our platform to share interesting and high-quality content.If content prov

289、iders do not continue to contribute content to our platform as a result of any factors,such as government policychanges and use of alternative communication channels or if their content is not high-quality,reliable or otherwise valuable to users,we maybe unable to provide users with attractive conte

290、nt and our user base and user engagement may decline.For example,in 2019,we found thatsome of our Beauty Diaries contained fraudulent information and were intentionally created to increase the ratings of certain medicalaesthetic provides.If we experience a decline in the number of users or the level

291、 of user engagement,our business and operating resultscould be materially and adversely affected.Our business may be materially and adversely affected by an unfavorable market perception of the overall medical aesthetic industry.Medical aesthetic services have been gaining popularity in recent years

292、.However,we believe that existing and potential users of themedical aesthetic service industry remain cautious about the risks inherent in medical aesthetic services and are therefore sensitive to anynegative review,comment or allegations on the industry in general.Any such allegations,negative news

293、 or research results regardingaccident,ineffectiveness of services,health risks or inadequate services standard by any medical aesthetic service provider,regardless ofmerits,may lead to deterioration in consumer confidence in and market perception of the medical aesthetic service industry,and could

294、leadto reduced demand for medical aesthetic services.Moreover,market perception of the medical aesthetic industry may be adversely affectedby external factors beyond our control,including restrictive government policies and guidance.As a participant to the industry,we couldconsequently be exposed to

295、 reputational harm and our business,results of operations,financial condition and prospects may be adverselyaffected.Table of Contents23We depend significantly on the strength of our brand and reputation.Any failure to maintain and enhance,or any damage to,our brandimage or reputation could material

296、ly and adversely affect our business,results of operations,financial condition and prospects.Our reputation and brand recognition,which depend on cultivating awareness,trust and confidence among our current or potentialusers,is critical to the success of our business.We believe a well-recognized bra

297、nd is crucial to increasing our user base and,in turn,facilitating our effort to monetize our services and enhancing our attractiveness to our users and service providers.Our reputation and brandare vulnerable to many threats that can be difficult or impossible to control,and costly or impossible to

298、 remediate.Regulatory inquiries orinvestigations,lawsuits and other claims in the ordinary course of our business,perceptions of conflicts of interest and rumors,includingcomplaints made by our competitors,among other things,could substantially damage our reputation,even if they are baseless orsatis

299、factorily addressed.In addition,any perception that the quality of our medical aesthetic services may not be the same as or better than that of othermedical aesthetic service platforms can damage our reputation.Any negative media publicity about any of the services available on ourplatform or produc

300、t or service quality problems at other online medical aesthetic service platforms,including at our competitors,may alsonegatively impact our reputation and brand.Negative perceptions of medical aesthetic products and services,or the industry in general,mayreduce the number of users coming to our pla

301、tform and the number of transactions conducted through our platform,which would adverselyimpact our revenues and liquidity position.We are subject to uncertainties,changes and developments in the regulatory framework in China with respect to the provision of onlinemedical aesthetic services industry

302、.As the online medical aesthetic service industry in China is at a relatively early stage of development,applicable laws andregulations may be adopted from time to time to address new issues and may require additional licenses and permits other than those wecurrently have obtained.As a result,substa

303、ntial uncertainties exist with regard to the implementation and interpretation of and compliancewith current and any future laws and regulations applicable to our business.We cannot assure you that we will be able to meet all theapplicable regulatory requirements,or comply with all the applicable re

304、gulations and guidelines at all times.Failure to do so could result insanctions,fines,penalties or other disciplinary actions,including,among other things,limitations or prohibitions on our future businessactivities,which may harm our reputation,and consequently materially and adversely affect our f

305、inancial condition and results of operations.We face risks related to health epidemics,natural disasters,and other outbreaks,which could significantly disrupt our operations.Given the nature of the medical aesthetic industry,our business could be significantly and adversely affected by health epidem

306、ics,including the effects of the COVID-19 outbreak in China and globally,Ebola virus disease,H1N1 flu,H7N9 flu,avian flu or Severe AcuteRespiratory Syndrome,or SARS.In addition,our business operations could be disrupted if any of our employees is suspected of havingCOVID-19,Ebola virus disease,H1N1

307、flu,H7N9 flu,avian flu,SARS or other epidemic disease,since it could require our employees to bequarantined and/or our offices to be disinfected.In addition,our results of operations could be adversely affected to the extent that any ofthese epidemics harms the Chinese economy in general.We are also

308、 vulnerable to natural disasters and other calamities.Fire,floods,typhoons,earthquakes,power loss,telecommunications failures,break-ins,war,riots,terrorist attacks or similar events may give rise to server interruptions,breakdowns,system failures,technology platform failures or internet failures,whi

309、ch could cause the loss or corruption of data or malfunctions of softwareor hardware as well as adversely affect our ability to provide services on our platform.Our business generates and processes data in the ordinary course,and we are required to comply with laws of mainland China and otherapplica

310、ble laws relating to privacy and cybersecurity.The improper use or disclosure of data could have a material and adverse impacton our business,financial condition and results of operations.As a business that provides mobile apps and generates revenue primarily from online subscriptions,we face risks

311、inherent inhandling and protecting data and are subject to various regulatory requirements relating to the security and privacy of data.The challengeswe face relating to our handling and protection of data include,in particular:Table of Contents24protecting the data in and hosted on our system,inclu

312、ding against attacks on our system by outside parties or fraudulentbehavior or improper use by our employees and business partners;addressing concerns related to privacy and sharing,safety,security and other factors;andcomplying with applicable laws,rules and regulations relating to the collection,u

313、se,storage,transfer,disclosure and securityof personal information,including any requests from regulatory and government authorities relating to these data.In general,we expect that data security and data protection compliance will receive greater attention and focus from regulators,bothdomestically

314、 and globally,as well as attract continued or greater public scrutiny and attention going forward,which could increase ourcompliance costs and subject us to heightened risks and challenges associated with data security and protection.If we are unable to managethese risks,we could become subject to p

315、enalties,including fines,suspension of business and revocation of required licenses,and ourreputation and results of operations could be materially and adversely affected.The regulatory and enforcement regime in mainland China with regard to data security and data protection is evolving and may besu

316、bject to different interpretations or significant changes.Moreover,different PRC regulatory bodies,including the Standing Committee ofthe NPC,the Ministry of Industry and Information Technology,or the MIIT,the CAC,the MPS and the SAMR,have enforced data privacyand protections laws and regulations wi

317、th varying standards and applications.See“Item 4.Information on the CompanyB.BusinessOverviewRegulationRegulations on Internet Security”and“Privacy Protection.”The following are examples of certain recentregulatory activities in mainland China in this area:Data SecurityIn June 2021,the Standing Comm

318、ittee of the National Peoples Congress promulgated the Data Security Law,which tookeffect in September 2021.The Data Security Law,among other things,provides for security review procedure for data-relatedactivities that may affect national security.In July 2021,the State Council promulgated the Regu

319、lations on Security Protectionof Critical Information Infrastructure,which became effective on September 1,2021.Pursuant to this regulation,criticalinformation infrastructure means key network facilities or information systems of critical industries or sectors,such as publiccommunication and informa

320、tion service,energy,transportation,water conservation,finance,public services,e-governmentaffairs and national defense science,the damage,malfunction or data leakage of which may endanger national security,peoples livelihoods and the public interest.In December 2021,the CAC,together with other autho

321、rities,jointly promulgatedthe Revised Cybersecurity Review Measures,which became effective on February 15,2022 and replaces its predecessorregulation.Pursuant to the Revised Cybersecurity Review Measures,critical information infrastructure operators that procureinternet products and services must be

322、 subject to the cybersecurity review if their activities affect or may affect nationalsecurity.The Revised Cybersecurity Review Measures further stipulates that critical information infrastructure operators ornetwork platform operators that hold personal information of over one million users shall a

323、pply with the Cybersecurity ReviewOffice for a cybersecurity review before any initial public offering at a foreign stock exchange.As of the date of this annualreport,no detailed rules or implementation rules have been issued by any authority and we have not been informed that we area critical infor

324、mation infrastructure operator by any government authorities.Furthermore,the exact scope of“criticalinformation infrastructure operators”under the current regulatory regime remains unclear,and the PRC government authoritiesmay have wide discretion in the interpretation and enforcement of the applica

325、ble laws.Therefore,it is uncertain whether wewould be deemed to be a critical information infrastructure operator under laws of mainland China.If we are deemed to be acritical information infrastructure operator under the cybersecurity laws and regulations of mainland China,we may be subjectto oblig

326、ations in addition to what we have fulfilled under cybersecurity laws and regulations of mainland China.Table of Contents25In November 2021,the CAC released the Regulations on the Network Data Security(Draft for Comments),or the DraftRegulations.The Draft Regulations provide that data processors ref

327、er to individuals or organizations that,during their dataprocessing activities such as data collection,storage,utilization,transmission,publication and deletion,have autonomy overthe purpose and the manner of data processing.In accordance with the Draft Regulations,data processors shall apply for ac

328、ybersecurity review for certain activities,including,among other things,(i)the listing abroad of data processors that processthe personal information of more than one million users and(ii)any data processing activity that affects or may affect nationalsecurity.However,there have been no clarificatio

329、ns from the relevant authorities as of the date of this annual report as to thestandards for determining whether an activity is one that“affects or may affect national security.”In addition,the DraftRegulations requires that data processors that process“important data”or are listed overseas must con

330、duct an annual datasecurity assessment by itself or commission a data security service provider to do so,and submit the assessment report of thepreceding year to the municipal cybersecurity department by the end of January each year.As of the date of this annual report,the Draft Regulations was rele

331、ased for public comment only,and their respective provisions and anticipated adoption oreffective date may be subject to change with substantial uncertainty.Personal Information and PrivacyThe Anti-monopoly Guidelines for the Platform Economy Sector published by the Anti-monopoly Committee of the St

332、ateCouncil,effective on February 7,2021,prohibits collection of user information through coercive means by online platformsoperators.In August 2021,the Standing Committee of the National Peoples Congress promulgated the Personal Information ProtectionLaw,which integrates the scattered rules with res

333、pect to personal information rights and privacy protection and took effect onNovember 1,2021.We update our privacy policies from time to time to meet the latest regulatory requirements of PRCgovernment authorities and adopt technical measures to protect data and ensure cybersecurity in a systematic way.Nonetheless,the Personal Information Protection Law elevates the protection requirements for per